NON-LINEAR IMPACT OF ENERGY CONSUMPTION ON CO2 EMISSIONS IN ASEAN-5 COUNTRIES

• Main Authors: Simon, Hiew, Jerome, Kueh, Nor Afiza, Abu Bakar
• Format: Article
• Language: English
• Published: Seybold Publication 2024
• Subjects: HA Statistics; HB Economic Theory
• Online Access: http://ir.unimas.my/id/eprint/44378/3/NON-LINEAR.pdf; http://ir.unimas.my/id/eprint/44378/; https://seyboldreport.org/article_overview?id=MDIyMDI0MDQwNzI0Mjk4OTAy
• Institution: Universiti Malaysia Sarawak

Using the panel autoregressive distributed lag/pooled mean group estimator (ARDL/PMG) and non-linear autoregressive distributed lag (NARDL) approaches, this study seeks to examine the linear and non-linear impact of energy consumption on CO2 emissions for the panel of ASEAN-5 countries (Indonesia, Malaysia, Thailand, the Philippines, and Singapore) over a period of 31 years (1990-2020). The empirical research revealed that all the explanatory variables, including energy consumption, have a negative impact on ASEAN-5's CO2 emissions in the long-run. In the short-run relationship, energy consumption has a statistically significant effect on CO2 emissions in the ASEAN-5, whereas the other explanatory factors have statistically insignificant effects. In addition, empirical results indicate that positive shocks of energy consumption reduce CO2 emissions, whereas negative shocks to energy consumption contribute to an increase in CO2 emissions in ASEAN-5 countries, indicating that the sources of energy move towards renewable energy sources in the long-run. In the short-run, the positive shock of energy consumption caused environmental damage, although the other variables suggest minor effects. This is because the ASEAN-5 tends to rely on fossil fuels to create energy in the short-run, resulting in an increase in CO2 emissions. To improve energy efficiency, however, policymakers should impose appropriate policies and investment programs. The policymakers should also stimulate research and investment to enhance the generation of renewable energy sources. Lastly, ASEAN-5 should dedicate greater resources to the development of green technology.